On-demand car service startup Uber has received a lot of flack in New York City for its notorious surge pricing.
Now, New York Attorney General Eric Schneiderman is investigating whether it’s actually legal, he wrote in an op-ed in The New York Times.
Surge pricing happens when there is a lot of demand, but not enough cars on the road. So Uber raises its fares to ensure it has reliable vehicles ready for those who actually need them.
But Uber’s surge pricing may violate New York State laws against price gouging, Schneiderman wrote. During a huge storm last year, Uber
charged New Yorkers as much as eight times the normal cost.
“We are investigating whether this is prohibited by the same laws under which I’ve sued gas stations that gouged motorists during Hurricane Sandy,” Schneiderman writes. “Uber makes some persuasive arguments for its pricing model, but the ability to pay truly exorbitant prices shouldn’t determine someone’s ability to get critical goods and services when they’re in short supply in an emergency.”
However, Uber’s surge pricing is very similar to methods airlines and hotels use to always make sure they have availability. They raise prices as seats/rooms fill up to make sure they always have something available.
The op-ed comes just a week after the New York Attorney General’s office filed paperwork to compel Airbnb to turn over the names of some of its hosts. That’s because the attorney general believes Airbnb is helping people run “illegal hotels.”Earlier this week, Airbnb complied and removed thousands of “illegal” listings.